(written in greek on november 17, 2012 )
In 2009 the Greek government owed something less than 300 billion Euros, amount which was equivalent to 120% of the Gross Domestic Product (GDP) .
In early 2010, the new government persuaded its lenders (markets) that it cannot return back their money, as the debt is not viable and thus began the debt crisis.
Since generally as viable debt is considered that debt that is less than the Gross Domestic Product (Dept <GDP), the mission of the government was to gradually reverse the inequality D> GDP to D <GDP. The simple math says that this could be done in three ways: Reducing Debt (D), increasing GDP, or changing simultaneously both of them. Is not it?
Very good. The Government applied exactly the reverse approach.
More specifically it increased the debt by asking for a loan mammoth amounting 240 billion, nearly the amount of its non viable debt, whereas simultaneously it started the process of reducing the GDP. The result ? The Debt climbed until now at 354 billion euro, the GDP shrank by 25%, the ratio between them is now at 182% and the process continues.
To get the full picture, please consider that the above loan was the biggest one in the world’s history, which exceeds the total amount that Greece had borrowed in the past 30 years. The Government to close the deal ceded the National sovereignty and by this way it mortgaged the entire country.
Noteworthy is the fact that in this period (October 2009 – Nov. 2012) the government did in addition the following: slashed its country workforce and continues to do so. That is, the Government greatly reduced the number of those who, in anyway, working to preserve the country and pay its debts. Currently the figure stands at only 3,726,663 people, which more or less means that 3.7 million people must meet not only the needs of 10 million (the entire population) but also to pay the debts of the government. The government the last three years attests everyone that knows what is doing, stating that the country is now on the right track.
In few and simple words, this is the essence of the sovereign debt crisis and the so-called rescue of the country.